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NBP mandated to raise Rs6.1bn for Railways

22 March, 2012

ISLAMABAD: Pakistan Railways Advisory & Consultancy Services Limited (PRACS) a subsidiary of the Pakistan Railways has mandated the National Bank of Pakistan (NBP) to act as a lead advisor for arranging Rs6.1 billion for balancing modernization and replacement (BMR) of up to 100 locomotives.

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ISLAMABAD: Pakistan Railways Advisory & Consultancy Services Limited (PRACS)— a subsidiary of the Pakistan Railways — has mandated the National Bank of Pakistan (NBP) to act as a lead advisor for arranging Rs6.1 billion for balancing modernization and replacement (BMR) of up to 100 locomotives.

The NBP will arrange for issuance of rated, unlisted and secured privately-placed term finance certificates (PPTFC) worth Rs6.1 billion and the amount would be utilised for the BMR of up to 100 locomotives owned by the Pakistan Railways, according to an official document exclusively available with Our Sources.

The document said pricing of the financing would be calculated at 6-month KIBOR + 0.50 percent per annum, payable semi-annually in arrears on the outstanding principal amount and will be calculated on a 360-day year basis. The first such profit payment will be due after six months from the issue date and subsequently every six months thereafter and financing would be for five years from the issue date including grace period of two years. Principal shall be repaid in 6 equal semi-annual installments starting from the 30th month from the issue date.

The document further said that majority of the TFC proceeds will be utilised to retire L/Cs which would be opened for import of spare parts and necessary refurbishment of locomotives. The lead time for retirement of such L/Cs would be of 7 months.

PRACS has a capacity of repairing ten locomotives per month and therefore it is expected that refurbished engines would start operation from the 8th month from L/C opening. In this way entire 100 engines will be overhauled in ten months.

On December 27, 2007 owing to the assassination of Mohtarma Benazir Bhutto, ex-prime minister of Pakistan, the public went on rampage and violent mobs attacked Railways assets and Railways sustained a loss of Rs7 to 10 billion and subsequently Pakistan Railways lost its tempo in earnings and revenues, the document described the rationale behind issuance of the TFCs.

According to the document, availability of locomotives on freight pool has decreased from 105 locomotives during 2007–8 to 40 locomotives during 2010–11 thus resulting in reduction in freight traffic carried from 6,187.3 million tonnes kilometres during 2007–08 to 1,881.20 million tonnes kilometre in 2010–11 near about 200 percent less.

Similarly, availability of locomotives on passenger has been reduced from 178 locomotives during 2007–08 to 95 locomotives during 2010–11. More than 60 passenger trains have been cancelled thus resulting 45 percent reduction in passenger kilometres i.e. 24,730.7 million passenger kilometre during 2007–08 to 17,060.9 million passenger kilometres during 2010-11 at an 15 percent average per year, it added.

The document further said that the freight traffic moving from Karachi Port is only 4 percent by railway & balance 96 percent is carried by road which is more expensive as compared to rail roads but also generates excessive pollution. There is an additional demand of over 14 billion tonne kilometres to be moved from Karachi to up country cities like Multan, Lahore, and Rawalpindi for which Pakistan Railways is required to expand its transportation capacity.

End.


 
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